Leases

12 Months Ended

Dec. 31, 2024

Note 23. Leases

A lease is defined as a contract, or part of a contract, that conveys the right to control the use of identified property, plant or equipment for a period of time in exchange for consideration. Substantially all of the leases in which the Company is the lessee are comprised of real estate property for branches, ATM locations, and office space with terms extending through 2052. Substantially all of the Company’s leases are classified as operating leases and therefore required to be recognized on the consolidated statements of condition as right-of-use (“ROU”) assets and corresponding lease liabilities. The Company has one existing finance lease for a portion of the Company’s principal offices with a lease term through 2052.

The following table represents the consolidated statements of condition classification of the Company’s ROU assets and lease liabilities. The Company elected not to include short-term leases (i.e., leases with initial terms of twelve months or less), or equipment leases (deemed immaterial) on the consolidated statements of condition.


(dollars in thousands)		December 31, 2024		December 31, 2023
Lease Right-of-Use Assets	Classification
Operating Lease Right-of-Use Assets	Operating Lease Right-of-Use Assets	$	80,165	$	86,110
Finance Lease Right-of-Use Assets	Premises and Equipment, Net		551		2,088
Total Lease Right-of-Use Assets		$	80,716	$	88,198

Lease Liabilities
Operating Lease Liabilities	Operating Lease Liabilities	$	88,794	$	94,693
Finance Lease Liabilities	Other Debt		8,274		10,190
Total Lease Liabilities		$	97,068	$	104,883

The calculated amount of the ROU assets and lease liabilities in the table above are impacted by the length of the lease term and the discount rate used to present value the minimum lease payments. The Company’s lease agreements often include one or more options to renew at the Company’s discretion. If at lease inception, the Company considers the exercising of a renewal option to be reasonably certain, the Company will include the extended term in the calculation of the ROU asset and lease liability. Regarding the discount rate, Topic 842 requires the use of the rate implicit in the lease whenever this rate is readily determinable. As this rate is rarely determinable, the Company utilizes its incremental borrowing rate at lease inception, on a collateralized basis, over a similar term. For operating leases existing prior to January 1, 2019, the rate for the remaining lease term as of January 1, 2019, was used. For the Company’s only finance lease, the Company utilized its incremental borrowing rate at lease inception.


	December 31, 2024	December 31, 2023
Weighted-Average Remaining Lease Term
Operating Leases	13.8 years	14.7 years
Finance Leases	28.0 years	29.0 years
Weighted-Average Discount Rate
Operating Leases	3.62%	3.59%
Finance Leases	7.04%	7.04%

The following table represents lease costs and other lease information. As the Company elected, for all classes of underlying assets, not to separate lease and non-lease components and instead to account for them as a single lease component, the variable lease cost primarily represents variable payments such as common area maintenance and utilities. Variable lease cost also includes payments for ATM location leases in which payments are based on a percentage of ATM transactions (i.e., ATM surcharge fees), rather than a fixed amount.


(dollars in thousands)	2024			2023			2022
Lease Costs
Operating Lease Cost	$	11,469		$	11,667		$	11,843
Variable Lease Cost		3,808			3,497			3,305
Short-Term Lease Cost		478			226			328
Interest on Lease Liabilities 1		671			721			728
Amortization of Right-of-Use Assets		55			72			72
Revaluation of lease liability		(330	)		—			—
Sublease Income		(6,105	)		(7,201	)		(7,147	)
Net Lease Costs	$	10,046		$	8,982		$	9,129

Other Information
Cash Paid for Amounts Included in the Measurement of Lease Liabilities:
Operating Cash Flows for Operating Leases	$	12,368		$	11,561		$	11,502
Operating Cash Flows for Finance Leases		671			721			728
Financing Cash Flows for Finance Leases		105			104			97
Non-Cash Operating Activities:
Right-of-Use Assets Obtained in Exchange for New Operating Lease Liabilities		3,244			2,477			10,804

Included in other debt interest expense in the Company’s consolidated statements of income. All other lease costs in this table are included in net occupancy expense.

Future minimum payments for finance leases and operating leases with initial or remaining terms of one year or more as of December 31, 2024, were as follows:


(dollars in thousands)	Finance Leases			Operating Leases
2025	$	677		$	11,529
2026		677			10,458
2027		677			9,478
2028		677			8,865
2029		677			8,115
Thereafter		15,581			73,459
Total Future Minimum Lease Payments		18,966			121,904
Amounts Representing Interest		(10,692	)		(33,110	)
Present Value of Net Future Minimum Lease Payments	$	8,274		$	88,794

The Company, as lessor, leases and subleases certain properties to third party lessees. Rental income for these operating leases, which includes payments received for common area maintenance and utilities, were $9.1 million, $10.1 million, and $9.5 million for the years ended December 31, 2024, 2023 and 2022, respectively.

Future minimum rental income under operating leases, including subleases, as of December 31, 2024, were as follows:


(dollars in thousands)	Minimum Rental Income
2025	$	4,916
2026		4,076
2027		2,899
2028		2,358
2029		881
Thereafter		2,168
Total	$	17,298